What is an HR Strategic Plan?: A Comprehensive Guide

Human resources is a key player in transforming a business. With increased focus on digital transformation, inclusion and diversity, data-driven decision-making, and prioritization of employee well-being, organizations are looking to redefine their HR strategies. They seek human resources professionals who can draft a comprehensive strategic plan to guide organizational change. In this blog, we will discuss how to create an HR strategic plan, what to include, best practices, and examples for you to master this aspect of human resource management.

HR Strategic Plan: Definition & Importance

A human resources strategic plan is a written document that contains details about the HR strategy for the stakeholders to understand and execute. This plan provides information, such as HR goals, initiatives, and priorities, and aligns them with the business objectives. Further, it specifies the resources and actions required to carry out and measure the progress of the strategies developed. The HR heads prepare the strategic plan in collaboration with organizational leadership that serves as a guide for all the HR activities in the organization. 

The reasons behind the importance of a strategic plan are given below:

• Helps in setting goals and tracking related progress. 
• Ensures the human resources department focuses on the predetermined priorities.
• Facilitates appropriate resource allocation. 
• Keeps all the stakeholders informed about the human resource strategy. 
• Enhances productivity and engagement of HR professionals by providing a clear roadmap to work. 
• Creates accountability for the HR strategy. 

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Steps to Develop an HR Strategic Plan

The strategic human resource management process is a comprehensive procedure. It evaluates an organization’s strengths, weaknesses, opportunities, and threats to devise a strategy. This strategy ensures operational goals and future demands for labor and talent are met. Let us discuss the steps to develop this document:

1. Understand the Business: Goals and Objectives

You require a thorough understanding of the past and present working of your organization to draft a strategic plan. Communicate with the key stakeholders and engage in discussions about the organization’s achievements, products and services, and goals. This will help you determine the business needs and identify the ways to fulfill them. 

2. Assess Current Capabilities: HR and Employees

The next step in strategic HR management and planning is to assess the current capabilities of the human resources department and the existing employees. Begin by evaluating the state of the HR with the SWOT analysis, i.e., understanding strengths, weaknesses, opportunities, and threats. You can perform an HR audit to examine the readiness of your HR department and review the policies and processes. This helps to check if they are functioning well or if any aspects need to be improved. 

Assessment of the employee’s current skill sets is essential to check if they meet the operational needs. You can review employee performance, project history, continuing education, professional growth, and resumes to evaluate the collective workforce skill level. The information collected will provide you with an idea of the roles best suited for each individual and if there is a need for upskilling or hiring. 

3. Forecast Labor Needs: Gap Analysis

One of the goals of strategic human resource management is to cater to forthcoming changes in a workforce to ensure smooth and continuous operations. You need to conduct a gap analysis to determine if your employees have the necessary skills and knowledge to maximize their productivity. 

Take into account both external and internal factors while forecasting the labor needs of the organization. Here are essential factors to consider: 

Internal Factors:

• Layoffs
• Personnel transfers
• Planned promotions
• Upcoming retirements
• Extended leaves of absence such as maternity or paternity leave

External Factors: 

• Technological development
• Global financial environment
• Legal and regulatory environment
• Demographic shifts
• Environmental factors 
• Labor market conditions

4. Outline Your Plan: Strategies to Manage, Motivate, and Retain Talent

Once you have done a gap analysis and forecasted your labor needs, move to the next step of the HR strategic planning process. In this step, you will outline your plan to meet the labor requirements of the organization, be it retaining or recruiting employees. 

Since employees require much more than rewarding compensation to remain engaged and productive in their work, it is essential to devise strategies to provide them with meaningful and fulfilling opportunities. 

Some of the strategies to manage, motivate, and retain employees include:

• Regularly auditing compensation, benefits, work environment, and employee engagement. 
• Identifying employees with skills outside their current roles seeking new challenges, and providing them with a development plan to grow within the organization.
• Creating a company culture that supports continuous learning. 
• Providing online training opportunities to upskill employees for new roles.
• Evaluating and adapting compensation and benefits packages to be more competitive.

Refer to your HR strategy and list the major objectives. Your HR strategic plan should have a brief description of initiatives and programs you will implement to achieve each HR objective.

5. Decide on a Budget

Considering finances in your human resource planning process is crucial because it ensures you can reference your budget and expenses as needed. The costs incurred on fulfilling the workforce requirements include hiring, training, payroll, etc. Deciding on a budget is essential to ensure you do not spend more than you intend to and efficiently achieve the strategic goals for human resources management. 

To achieve this, you can use budget forecasting reports, data visualization tools, and financial software to keep track of your annual expenses.

6. Specify KPIs for HRM Objectives

Specifying key performance indicators (KPIs) is necessary to monitor the performance of strategic HRM objectives. These are measurable results that showcase an organization’s success in achieving predetermined goals. KPIs are mentioned in the strategic plan so that the company can make adjustments and improve future strategies. Some of the performance indicators you can specify are turnover rates, time to hire, employee satisfaction scores, and headcounts. 

7. Create a Vision and Mission Statement: Summarize HR strategy

While the human resources strategic plan includes an outline of the HR strategy, you need to add a summary as well. Mission and vision statements are written to fulfill this purpose. These briefly describe the human resources strategy and act as an indicative test for future policies. 

8. Prepare a Document: Layout and Design

Remember that the aim of preparing the human resources strategic document is to allow various stakeholders to clearly understand the information. Therefore, this document has to be accessible and engaging. Here are some points to follow while preparing the HR strategic document:

• Select an appealing layout template best suited to your needs. Keep into account the information you will add and if there’s a design style that the documents of your company follow. 
• Customize the template so that it speaks to your audience. Use simple and concise language instead of jargon. 
• Use company-specific acronyms, words, or phrases that are common among the employees of your organization. 
• Include visual elements such as graphs, charts, and infographics to display projections, statistics, metrics, and more effectively. 

9. Develop a Communication Plan

The next step is to inform and communicate your HR strategy at all levels of the organization. For this, you need to develop a communication plan. It will include strategies and tactics to convince and motivate everyone in the organization to become familiar with the plan and make efforts towards implementing it. Here are some ways to share the strategic plan:

• For HR Teams: The HR teams of the organization should be well-versed in the plan. Communicate to them how the plan will roll out and their day-to-day responsibilities in implementing the strategy. 
• For Leadership Team: Since the leadership team includes a few individuals, you can prepare a presentation to walk them through the strategic plan. Further, explain how the plan aligns with the organization’s overall business strategy.
• For Employees: It is essential that the employees understand the purpose and benefits of your strategic plan. You can use common communication channels like meetings, newsletters, emails, and social media posts to help employees grasp the HR strategy and plan.

If the plan prompts shifts in practices and policies that affect employees, communicate the changes well in advance. Explain how the changes are vital and will benefit the company and teams. Further, provide information about the support you will offer them during the transition.

10. Map Out Action Plans

Use the HR strategic plan to create specific action plans. You can divide each objective into achievable tasks to accomplish them promptly. Then, assign these tasks to relevant teams and fix a schedule. Determine timelines, deadlines, and milestones to keep the HR professionals motivated and focused on the strategic plan. These action plans can act as points of reference for accountability, measuring progress, and avoiding delays. 

What to Include in an HR Strategic Plan?

The strategic plan of human resources is a roadmap for implementing initiatives that support the HR goals. Here are vital components that make the HR plan effective:

• Organizational Values and Goals: The official organizational values and goals should be mentioned in the strategic plan.
• HR Objectives and Key Results: These help in quantifying the success of the strategic plan. Therefore, it is essential to specify the plan’s objectives and HR metrics to measure progress. 
• HR Mission and Vision Statements: These statements are integral to the HR strategic plan. The vision statement mentions the purpose and ultimate goal of HR, while the mission statement provides the path to achieve the goal.
• List of Core HR Initiatives: Summarize the initiative of HR that will help in achieving the strategic human resource management objectives. These initiatives can be related to any aspect of HR, like recruitment, company culture, employee performance management, and compensation. 
• Priority Aspects: The strategic plan includes the tasks in the priority aspects or areas that the HR professionals will focus on when working towards the objectives. A description of how these efforts will enhance assistance from HR and support business goals is also provided. 
• Risks and Management: You should include the potential risks or challenges that may arise while executing the strategic plan. Additionally, discuss how the organization can handle these challenges and minimize the risks. 
• Resources: Specify how the resources (budgetary, human capital, and technology) required to implement the HR initiatives will be allocated to ensure cost efficiency. 
• HR Operating Model and Required Skills: There are various operating models, such as agile, business partner, and functional to describe how the HR department is structured and provides its assistance. Specify which of these models is used in your organization. Additionally, mention the skills and expertise required for this operating model to function effectively. 

HR Strategy Implementation: Best Practices

For the successful execution of the HR strategy specified in your plan, you can implement the following best practices:  

• Pay Attention to the Budget: Human resource strategy needs a sufficient budget to be enacted proficiently. Therefore, concentrate on initiatives where cost considerations align with the organization’s budget. 
• Ensure Collaboration: HR strategy implementation requires collaboration between HR professionals and other key stakeholders. Make sure that managers and senior leaders of the organization are well-informed about the strategy. 
• Prefer Strategic Solutions: To implement the HR strategy effectively, analyze the root cause of challenges and plan accordingly. While you can adopt short-term or transactional solutions for immediate issues, they are not viable in the long run. Therefore, prefer strategic solutions that focus on addressing the underlying issues and consider the long-term implications of decisions. 
• Monitor and Optimize Strategy: Implementing an HR strategy requires measuring its effectiveness over time with KPIs. If the desired results are not achieved, optimize the strategy accordingly. 
• Maintain a Balance: Effective administration acts as the foundation for strategic initiatives. There are several administrative responsibilities of HR, including day-to-day operations (record keeping), ensuring compliance (with laws, regulations, and internal policies), and managing risks (data security, confidentiality). Without proper administrative processes, strategic plans may be undermined by operational inefficiencies or compliance issues. Therefore, strike a balance between strategic thinking and administrative responsibilities. 

Examples of an HR Strategic Plan

Let’s dive into the HR strategic plan examples of some of the popular organizations to understand how they transformed with the help of strategic human resources activities. 

1. Google

The strategic plan of Google emphasizes a data-driven approach with people analytics to rework its HR policies and transform the workforce into a more efficient one. It prioritizes transparency, communication, and employee well-being through initiatives like open access to company information, feedback options, fitness centers, and other programs. 

This is one of the strategic human resource management examples where the organization encourages innovation and risk-taking by creating a culture of psychological safety. With proper implementation of the strategic plan, Google achieves high employee satisfaction, job seeker interest, retention rates, and effectiveness at the managerial level. 

2. Nissan

Nissan is a Japanese multinational automobile manufacturer. It is known for combining Japanese manufacturing methods with British productivity principles, a concept that is called ‘kaizen’. This is the term for Nissan’s core philosophy showcased in its strategic plan that emphasizes continuous improvement in job performance. 

Teams comprising top talent dedicated to skill development are hired based on the ‘kaizen’ philosophy. The organization provides several learning opportunities to its employees, even in remote work environments through e-learning content. Further, Nissan’s HR practices include providing leaders complete autonomy in recruiting their teams and transparent salary structures. The concept of self-designed careers and autonomy highlight the unique HR strategy examples in the industry. 

Conclusion

Every organization needs an HR strategic plan for efficient and effective implementation of the human resources strategy. You can navigate the steps provided and work on customizations according to your business. Ensure that the strategic plan document is kept safe to be referred to later to analyze the performance of the strategies developed. Also, explore HR best practices to transform your organization and expand your knowledge.